Labour should take responsibility for resolving “the mess” left behind by private finance initiative (PFI) deals used to fund the building of hospitals under Tony Blair and Gordon Brown, Jeremy Corbyn has said.

In an article for the Guardian, the Labour leadership frontrunner said the NHS is now paying the price for New Labour having been “cowed by the press, and duped by the money men” when it used private finance for building health projects.

“Labour has a duty to remove the PFI burden from the NHS – this really was our mess, and we have to clear it up,” Corbyn said.

The Islington North MP said that the legacy of PFI deals – where public infrastructure projects are funded with private capital – was that some hospitals were suffering under a weight of debt.

Labour must clean up the mess it made with PFI, and save the health service | Jeremy Corbyn

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He said that there was a case for Labour not only to draw a line under the PFI deals of previous governments but also to bail out such hospitals.

“In opposition we need to campaign for a fund to be set up to bailout NHS trusts from PFI schemes forced upon them. This will save our NHS, rebuild our economic credibility and most importantly, save lives,” he said.

Under the coalition government, seven NHS trusts had to be given access to a special bailout fund of £1.5bn in 2012. South London healthcare trust, which runs three hospitals in south-east London, also had to be placed in administration because of its PFI obligations.

On top of these bailouts, some doctors warn that hospitals are still facing unsustainable repayments to private companies.

Corbyn said figures from the Unite union show that 15 NHS trusts are spending more than 5% of their annual budgets on PFI financing, and two-thirds of NHS trusts in deficit have PFI debts.

Corbyn’s argument is that Labour’s investment in the NHS and new hospitals was welcome, but too much was done under PFI, which he said was “like buying your house on a credit card”.

He said that ministers at the time were “too petrified to make the argument for conventional borrowing, and instead fell for the City’s con-trick”.

NHS trusts and the crippling burden of PFI | Letters

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Corbyn also pointed out that Unison tabled a motion calling for a moratorium on PFI deals and a review as long ago as 2002, and that he personally raised concerns in parliamentary debates, questions and committee hearings from 1998 onwards.

“The leadership ignored us all: MPs, councillors, public sector workers, members and conference itself. Our pleas fell on deaf ears. Now NHS patients are paying the price, with services and staff cut so that PFI debt repayments can be made,” he wrote.

He added: “Much of the PFI debt is now owned offshore, to avoid paying tax on the profits generated from the taxes you and I pay. Huge profits from public money are being made by tax dodgers. This isn’t the NHS that Nye Bevan built.”